The castle of Penella stands on a limestone rock with vertical walls on its north side located in a commanding postion overlooking Alcoy and Cocentaina At the end of the second half of the thirteenth century, Jaime I the Conqueror ruled in this area. The border situation with the kingdom of Al-Andalus called for the reinforcement of old Muslim castles and the construction of new ones. In 1271, Jaime I granted Guillem Pons de Villafranca a license to build a castle on the rock of Peniella.
The castle has a marked defensive character for territorial control. Its location allowed it to control any armed incursion or revolt provoked by the Saracen (Arab) communities that resisted to the East in the Vall de Seta, Travadell, Gallinera, Guadalest.